CBO Trumpcare Estimate – 24 million Increase in Uninsured by 2026

The long awaited CBO scoring of the Trumpcare bill is now out, and the results may give pause to moderate Republicans worried about the substantial increase in uninsured resulting from the proposed Obamacare repeal and replace legislation.

On coverage, the CBO finds that by 2018, 14mm more people would be uninsured relative to the current law.  The CBO states that the increase in uninsured is due to the repeal of the individual mandate and associated penalties as well as increase in premiums.  It is important to recognize that a large portion of this 14mm increase in uninsured appears to be voluntary according to the CBO: “Some of those people would choose not to have insurance because they chose to be covered by insurance under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums.”

Nonetheless, Republicans will be concerned by the large increase in uninsured as it is very difficult to sell a people that increases the uninsured population by such a large margin.  Furthermore, by 2026, the CBO estimates the increase in the uninsured population to be 24mm higher than the current law.  The additional increase in uninsured is due to the reduced expansion of Medicaid: “The reductions in insurance coverage between 2018 and 2026 would stem in large part from changes in Medicaid enrollment—because some states would discontinue their expansion of eligibility, some states that would have expanded eligibility in the future would choose not to do so, and per-enrollee spending in the program would be capped. In 2026, an estimated 52 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.”

On premiums, the CBO finds that average premiums will be 15-20% higher in 2018/2019 but 10% lower by 2026.  However, the CBO estimates that due to changes in age rating rules (ie allowing insurers to charge 5 times more to older individuals vs. younger individuals) will result in significantly higher premiums for older Americans and significantly lower premiums for younger Americans: “Under the legislation, insurers would be allowed to generally charge five times more for older enrollees than younger ones rather than three times more as under current law, substantially reducing premiums for young adults and substantially raising premiums for older people.”

On the budget, the CBO finds that Trumpcare will reduce the budget deficit by $337 billion over the next 10 years as a result of $1.2Bn less in spending offset by $900Bn less in taxes.

On balance, the CBO report appears to be a setback to Republicans who were already downplaying the accuracy of the CBO report.  The increase in the uninsured population was higher than most expectations, which will increase pressure on Republicans to modify the current bill in order mitigate the coverage loss.

Disclaimer– This article is for informational purposes and does not constitute financial or other advice.  Please consult with your financial advisor before making any investment decisions.  Please read full disclaimers here.